China has made an unexpected move by keeping its central bank governor and finance minister in their posts, in a bid to reassure markets and investors as the country faces economic headwinds. Yi Gang, the governor of the People’s Bank of China (PBOC), and Liu Kun, the finance minister, were approved to remain in their positions by China’s parliament. Analysts say that this move is aimed at boosting market confidence as China faces stiff challenges both abroad and at home. The global economic outlook is challenging, and continuity and stability in the leadership of economic and financial affairs are helpful to boost market confidence, said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
The most significant change at the ongoing annual session of the National People’s Congress has been the promotion of Li Qiang to premier on Saturday. Li, a longtime confidant of President Xi Jinping, takes a role charged with managing the economy, replacing Li Keqiang, who stepped down after two five-year terms. Xi has been installing allies in key roles amid a sweeping government reshuffle as he begins a norm-breaking third five-year term as president.
Yi, who was educated in the United States and appointed PBOC governor in 2018, had widely been expected to retire after being left off the ruling Communist Party’s Central Committee during the party’s once-in-five-years congress in October. Sources had told Reuters last month that Zhu Hexin, chairman of state-run financial conglomerate CITIC Group Corp, was likely to succeed Yi as head of the central bank.
The appointments “indicate that the government put professionalism, management and the art of fine-tuning on the front burner when it comes to picking the central bank governor and finance minister, as positions at the helm of core economic departments need tremendous professional skill,” said Sun Fei, an economist.
Top Xi aides Ding Xuexiang and He Lifeng, as well as former mayor of Tianjin, Zhang Guoqing, and former Shaanxi province party secretary Liu Guozhong, were also appointed as vice premiers. “Both Ding and He have been close political allies to President Xi, and Mr He and President Xi have known each other for decades,” Nomura analysts wrote in a recent note. “Such close relationships may help the new government’s policy delivery and cross-ministry coordination,” the analysts said.
As expected, Wang Wentao stayed on as commerce minister. Zheng Shanjie, governor and deputy party secretary of Zhejiang province, was approved to take over as head of the National Development and Reform Commission, the powerful state planner.
The cabinet faces the task of revitalising the Chinese economy, which last year expanded just three percent — one of its weakest performances in decades. China’s housing market, which along with construction accounts for more than a quarter of the gross domestic product (GDP), remains in a slump, having been dealt a hefty blow since Beijing started cracking down on excessive borrowing and rampant speculation in 2020.